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It's not irrational it just has more to do with corporate real estate and control than productivity or employee satisfaction. Large companies don't do anything solely for the benefit of their employees.
Especially with land prices trending upwards. You don't want to be the exec who has to explain that yes, productivity is up 15%, but you're sitting on a skyscraper that nobody wants to buy because it's worth $60mil or whatever.
If no one wants to buy it at $60mil then it is not worth that much.
Line goes up, not down.
I think it is irrational, in the sense that executives' sole legal responsibility, at least in the US, is to make as much money as possible for their shareholders. Favoring control over productivity is a violation of that. They are gratifying their egos instead of doing their jobs.
Of course, in a sane world, how they treat their employees would be an issue, not just profitability.